Custodians of Wealth

FAMILY OFFICES ARE HELPING PEOPLE PROTECT AND GROW THEIR WEALTH WHILE ALSO ENSURING SMOOTH SUCCESSION PLANNING

- NEVIN JOHN

Creating wealth is easier than managing wealth, says Raamdeo Agrawal, Co-Founder & Non-Executive Chairman, Motilal Oswal Group. Fortunes are made — and destroyed — often within a generation. But when businesses do survive beyond the first, expanding families and conflicts of interest among family members could potentially implode businesses and destroy wealth.

“When the size of the economy doubles, the wealth of business families increases manifold. Assigning Family Offices to protect and utilise the wealth according to the wish of its founders will help avoid mismanagement of assets,” says Agrawal.

Several business families in pre-liberalisation India disappeared because of a lack of focus on wealth management and preservation. However, an institutionalised wealth management system through Family Offices is gaining popularity at a time when assets are appreciating faster than ever.

There are just over 100 billionaires in India with a wealth of around $400 billion — a large portion of which is the value of the promoter shares they hold.

Family Offices are privately held entities that handle corporate groups’ wealth and investments. They can be a single Family Ofice — handling one family’s wealth — largely run under the guidance of the patriarch or someone appointed by the family, or a multiFamily Office that handles wealth of many families and are run by professionals.

According to the internal estimate of a foreign bank, Indian business families may have deployed about ₹6-7 lakh crore of wealth through Family Offices.